Renewable energy target needs a rethink | The Australian

GREENCHIP: Giles Parkinson | October 12, 2009
Excerpts included here- see original for full article

THE accelerating slump in the price of renewable energy certificates is putting pressure on the federal government to review the structure of the system that supports its renewable energy target.

The price of certificates fell more than 15 per cent last week to $28, its lowest in almost three years, extending a steady slide since reaching a peak of $51 in May and taking the fall since the renewable energy target legislation was passed in August to 30 per cent.

Certificates, each representing 1MW hour of renewable energy produced, are the currency generated by the renewable energy target scheme and are supposed to bridge the gap between the price of coal and gas-fired energy and renewables.

But the market is being swamped by certificates generated by domestic solar hot water and heat pump systems, and some industry analysts say if this continues it could last for several years and may cause the delay or cancellation of wind power and other renewable projects because the price signal will simply not be strong enough to make the projects viable.

The renewable energy industry is putting pressure on the government to alter the scheme by creating a separate heat market for solar hot-water systems and heat pumps, particularly if governments mandate that all new houses be equipped with solar hot water.

And the industry is calling for annual targets to be adjusted and take into account the anticipated flood of phantom certificates created by the multiple credits allowed for household solar systems.

While European countries, the US and China are surging forward with investment in renewables, Australia has been left flat-footed.

The renewable energy target is expected to fix part of the problem and spark large investments in wind turbines, but the development of two of the transformative energy sources of the future, solar and geothermal, are at a virtual standstill, despite the fact Australia enjoys the most generous resources in the world.

This year, about 6000MW of solar energy capacity will be installed around the world, a further 9000MW expected next year and doubling to an estimated 20,000MW by 2013.

Australia’s share this year is a paltry 50MW and it is not expected to increase significantly in the next few years.

Solar thermal is expected to offer the best solution for large-scale and distributed solar power supplies and the present confirmed development portfolio across the world is estimated at 4000MW and in Australia just 8MW.